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Boiler room fraud

Getting To Know

What is boiler room fraud?

Boiler room fraud is a type of unlicensed share dealing, which is a regulated activity that falls under the Financial Services and Markets Act 2000. As mentioned, the term “boiler room fraud” gets its name from the intense, high pressure sales tactics used by brokers, but also the busy centre of activity from which the brokers typically operate. We find that brokers who are involved in boiler room fraud typically operate from countries such as Spain, Bermuda and America, so they are outside the UK authority barriers. 

A “Boiler Room” is where salespeople will front as brokers and then use cold-calling techniques, committing fraud by selling either non-existent or worthless shares, to ring investors. The brokers will try to persuade investors into parting with their money to buy these shares and often, intimidating tactics are used with a lot of “brokers” often saying that a binding verbal agreement is in place or that they will take legal action. Boiler room fraud is a highly emotional form of investment fraud and it makes victims feel manipulated and taken advantage of. 

At Wealth Recovery, our team of legal experts have experience in helping recover lost funds for our clients who have fallen victim to boiler room fraud. As one of the more high-pressure investment and trading frauds, boiler room fraud is one which, although now not as common as other trading scams, does still occur and affects a large number of investors each year. 

Boiler room fraud is a scam that targets people through investment in either worthless or non-existent shares, causing the trader to lose their funds. This type of fraud gets its name from the high-pressure, persistent sales techniques used by brokers. 

Further Information

Frequently asked questions

01.Are boiler room fraud brokers legitimate+

Often, boiler room fraud brokers are not legitimate or regulated brokers. They are typically salespeople who pretend to be brokers, but who are very well-spoken, with knowledge in shares and investing and who are confident in their cold-calling approach, providing a level of legitimacy to their front. Most often, these brokers will have experience in working in the stocks and shares market. 

Boiler room fraud brokers are very persistent in their approach and will initially cold call investors, then call them again several times, trying to get them to invest. They may use tactics such as saying that a company will soon announce a major discovery and that, if invested in now, will increase the price of shares purchased. Often, immediate payment is demanded or the brokers will issue threats for noncompliance, intimidating the investor into purchasing the stocks or shares. 

A broker using boiler room fraud tactics will give investors only positive information about the stocks at first, discouraging them from conducting any further research. Catchphrases such as “it’s a sure investment” or “this is a once in a lifetime opportunity” in an attempt to reel investors in. Usually, we find that brokers will target middle-aged investors who may have bought shares, with their details typically found on share-related registers or databases. 

02.What are the signs of boiler room fraud?+

Boiler room fraud often has some telltale signs, including: 

  • Being asked for money upfront, or asked to pay unexpected fees before shares can be released
  • You are put under pressure to agree to invest in the shares or stocks
  • The broker asks you to keep the details of the investment secret
  • You know the company is overseas (it is illegal for UK-based companies to cold call investors to sell them shares)
03.How can I avoid boiler room scams?+

Boiler room scams take full advantage of the emotional aspect involved in order to get their money. Using high-pressure sales tactics, such as cold-calling, intimidation and using their limited knowledge to appear confident. By assuring investors that their investment will generate a return, this then causes doubt in the investor’s mind and makes them feel as though they are missing out if they don’t take the investment. If you ever receive a cold call with the promise of getting a high return on your investment and the above tactics are used, then it is highly likely that this is a form of boiler room fraud.

04.What does dialing and smiling mean?+

“Dial and Smile” is a term often mentioned when discussing boiler room fraud. It refers to the technique used by telemarketers when cold-calling potential buyers. As implied, the techniques used rely on high-pressure sales tactics and highly emotive intimidation and manipulation in order to try and persuade people into buying things that they wouldn’t typically want. Essentially, “Dial and Smile” is essentially a slang term for cold-calling someone.

05.Are boiler room scams illegal?+

Boiler room scams are illegal in the UK, however, the brokers are usually based overseas where UK regulations don’t come into play. Boiler room fraud brokers operate out of many different countries, however the most popular we see are from Spain, Bermuda, Japan and America.

06.Are pump and dump scams linked to boiler room fraud?+

“Pump and dump” is where scammers use illegal market manipulation to artificially boost the price of their own shares in order to then go on and sell them at a profit. Pump and dump scams are just one of the many cryptocurrency scams due to the lack of market regulation. In a typical pump and dump scam, scammers will use cold-calling techniques or contact victims on social media and then try and persuade them to buy, usually with the promise of securing a high guaranteed profit. Once the price starts to increase, the scammers will then sell their shares, leaving investors now having almost worthless stocks.

Victim of a Scam?

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We understand that being the victim of boiler room fraud can be tough to handle, but we hope that our support, action and guidance can enable you to recover lost funds and regain a sense of confidence and security in making trades and investments online.


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